How the CoinDesk Scoop Led to the Downfall of Sam Bankman-Fried and the FTX Crash

How the CoinDesk Scoop Led to the Downfall of Sam Bankman-Fried and the FTX Crash

New York
CNN Business

The amazing level of Apparent deception organized it Former crypto king Sam Bankman-Fried It has not been previously disclosed government investigators Or a financial news organization with major power, like The Wall Street Journal.

Instead, the first overview of the alleged wrongdoing By Bankman-Fried — known to insiders as SBF — came earlier this month from a small news site unknown to much of the public that has spent years chronicling the turbulent events and The mysterious world of cryptography: CoinDesk.

Indeed, the reporter-editor duo who worked to crack the story, which set in motion a dizzying chain of events that led to billions of dollars evaporating, didn’t realize the scoop they had on their hands when they first obtained a document that cast doubt on the stability of their crypto empire. SBF.

“Hi Nick,” reporter Ian Allison emailed editor Nick Baker about his initial story plan, according to a copy of the letter provided to me, “I’m looking into some Alameda-related stuff if you want to chat this week, no mad rush.”

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Allison got a financial document It showed that the 30-year-old SBF had engaged in shady behavior for using its cryptocurrency company, FTX, to support its separate investment firm, Alameda. But that wasn’t obvious at first glance and it took “a few days to figure out the story,” Baker reminded me on a phone call this week.

Baker said he and Allison both “knew it was an important document,” but stressed that they had no understanding at first of the huge story that was buried in the table of numbers.

“Did you know I’d be talking to you today? I didn’t expect it to be this big,” Becker told me bluntly.

Over the next two days, Baker worked, from a home office in New York, with Alison, who lives in Scotland, to “turn” the financial document into a story. On November 2, they published the explosive report, quickly capturing the crypto world’s attention and shaking the foundation of the mighty FTX exchange. The SBF, the prolific amplifier, was remarkably silent.

“It was something that blew all of us inwardly,” Baker recalled. “Sam, whenever there’s a big story about him, he’s not shy about tweeting it. And his silence was deafening. That was one of the things we were surprised about in the following days. He didn’t say anything.”

This silence was likely because the SBF knew CoinDesk had revealed something big. And he had good reason to believe so. The article raised massive doubts about FTX’s validity, spurring an effective rush of investors to suddenly withdraw money from the company putting its solvency at risk.

After the scoop, SBF’s main competitor, Binance, suggested that it would bail out the company with an acquisition. But in the second scoop that sent FTX crashing, Allison knew the crucial deal wasn’t going to happen. Baker said he was publishing that story, which he knew would “unleash chaos and destruction” in the crypto world, which made him anxious.

“I was nervous,” Becker said. “It was definitely cold hands [moment] – Not because I thought [the scoop] It was wrong, but because I knew he was right. I knew the pain ahead. Telling an honest story has consequences.”

Soon after, in the chaos of the cryptocurrency market and his company, SBF resigned in disgrace and FTX moved to declare bankruptcy, marking one of the most stunning collapses in the history of finance.

“There are a few parallels to a story with a high impact — and a very fast one,” Baker said, noting that the undoing of FTX happened much faster than that of companies like Enron. “We dropped the story and within a week and two days they were bankrupt and this crypto-leading number went down. It’s amazing. Really amazing. I’ve never seen anything like this.”

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